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The economic outlook for the global economy remains positive, but risks of a correction have increased sharply as a result of increasing trade tensions. Geopolitical risks and vulnerabilities in various emerging economies are also worrying.

The US had announced USD 50bn of tariffs on Chinese exports and China has responded with a matching USD 50bn of tariffs on US exports. But the US has now raised the ante with a further unspecified USD 200bn of tariffs on Chinese goods - and the threat of a further USD 200bn if China responds again in kind. What is the possible impact and what might happen next?